EC-912
This type of competition occurs between businesses that sell similar products, like Coca-Cola and Pepsi.
What is Direct Competition?
This category of risk involves natural disasters or accidents and can usually be covered by insurance.
What is Insurable Risk (or Pure Risk)?
This basic formula for profit is calculated by subtracting total expenses from this.
What is Total Revenue?
Often called the "engine" of the system, this is the primary incentive for taking the risk to start a business.
What is Profit Motive?
In this system, the government owns the factors of production and makes all major economic decisions.
What is a Command Economy?
In this market structure, one single seller dominates the entire industry, leaving no room for competition.
What is a Monopoly?
Shifting tastes in fashion or a sudden economic downturn are examples of this specific type of risk.
What is Economic Risk?
If the cost of raw materials increases but the selling price stays the same, this will happen to the profit margin.
What is Decrease?
This fundamental right allows individuals to own, use, and dispose of things of value.
What is private property?
In this system, the government owns the factors of production and makes all major economic decisions.
What is a mixed economy?
This term describes competition based on factors like quality, service, and location rather than price.
What is Non-price Competition?
This strategy involves a business taking steps to lower the impact of a risk, such as installing a sprinkler system.
What is Risk Mitigation (or Reduction)?
This refers to the amount of output produced per unit of input; when it rises, profits usually follow.
What is productivity?
This "invisible hand" concept suggests that the market stays balanced through the interaction of these two forces.
What are supply and demand?
This is the specific name for a system where resources are allocated based on long-standing customs and beliefs.
What is a Traditional Economy?
A market situation where a small number of large firms have the majority of market share (e.g., the airline industry).
What is an Oligopoly?
Unlike pure risk, this type of risk offers the possibility of either a gain or a loss, such as investing in a new product.
What is Speculative Risk?
Rent and insurance are examples of these types of costs that do not change based on the number of goods produced.
What are Fixed Costs?
In a private enterprise system, this group ultimately decides which goods and services will succeed by "voting" with their dollars.
Who are consumers?
The total value of all goods and services produced within a country's borders in one year is known by this three-letter acronym.
What is GDP? (Gross Domestic Product)
This economic concept occurs when many buyers and sellers offer identical products, and no one can influence the price.
What is Perfect Competition?
When a business decides not to launch a product at all to avoid any chance of loss, they are practicing this.
What is Risk Avoidance?
This is the point where total revenue exactly equals total costs, resulting in zero profit or loss.
What is Break-even Point?
This French term describes a "hands-off" economic policy where the government interferes as little as possible.
What is Laissez-faire?
This economic term describes the condition where unlimited human wants meet limited resources.
What is Scarcity?